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The Threats of Zara:1.Fierce Competition weighs a 0.20 with a rating of 4; one of the biggest threatsbecause of new and affordable products from different stores such as H&M,Forever 21, and Uniqlo may harm Zara in terms of consumers’ loyalty. Theanalysis from Five-Forces also gives us some details about how this fiercecompetition can affects Zara. However, somehow, regardless the amount ofadvertising investments Zara made, this brand can still enjoy remarkable growthacross the globe. Allegedly it is the supply chain that makes it the winner.Therefore, we conclude that the response rate is superior. 2.Lawsuit related to Sweatshops weighs a 0.05 with a rating of 2; this threat is notmuch of a threat because the cases were not highly publicized, and also because
15the company has created a commitment to stop the practice of sweatshops in everyfactory; in every country where they produce their products.3.Possible imitation of goods weighs a 0.05 with a rating of 2; there is a risk ofZara’s products being copied, either by their competitor (the designs) or byirresponsible people that practice counterfeiting. However, since Zara is targetingthe middle-upper class, therefore, it is not much of concern. Moreover, Zara’sconsumers are popularly known as loyal consumers to the brand.4.Dilution of Brand Equity weighs a 0.2 with a rating of 4; this is also an importantthreat because it can decrease in its brand value in customer eyes. Therefore, Zarais implementing their best strategies to increase the brand equity. Probably moresignificantly to their European consumers through the eco-friendly companycampaign which is highly noticed and precedence by European consumers. Based on the EFE Matrix result, we see that Zara has a score of 3.45 which indicates astrong response from Zara towards the opportunities and anticipation of threats.3.3 Competitive Profile MatrixCritical Success FactorsWeightZaraH&MUniqloRatingScoreRatingScoreRatingScoreTarget foreign market selection 0.1540.630.4520.3Enter marketing strategy 0.0518.104.22.168Timing of entry 0.0522.214.171.124Recognition of brand 0.1240.4830.3630.36Customers knowledge 0.140.430.330.3Marketing support in global market 0.0610.0640.2440.24Location selection 0.0430.1220.0830.12Design collection 0.1230.3630.3620.24Employee 0.05126.96.36.199Price policy 0.130.340.440.4Sales promotion 0.0510.0540.240.2Organization and control business 0.1140.4420.2230.33TOTAL13.112.912.99a.Target Foreign Market Selection: One of the most important factors in determiningsuccess in this highly competitive industry which force its players to have massive
16expansion strategy. That is why the weight is 15%. Comparing to its other 2competitors, Zara has the highest score since they have been in the internationalmarket longer then H&M and Uniqlo. Zara was the first to start opening new storesin countries outside their country-of-origin’s continent. Zara expanded outsideEurope firstly in 1997 to Israel[Ind132], followed by H&M which is originated inSweden, first opened their store outside Europe in 2001, located in New York.